North/South divide emerges between landlords who want to quit
Data from Cornerstone Tax reveals that one-in-five landlords are considering selling up due to rising costs associated with their property.
A North South divide is quickly emerging between landlords who want to exit the market due to new and pending regulatory constraints and rising costs which is pushing up rental prices for tenants caught on the regions.
New research from Cornerstone Tax reveals that almost one-in-five (17%) of all landlords are considering selling up due to rising costs associated with their property – with more than half (52%) of Brighton landlords wanting to throw in the towel.
STARK DIVIDE
The figures illustrate a stark divide between the North and South of the country.
Nearly a third of Birmingham landlords (33%); just over a quarter of Leeds landlords (26%); just over a fifth (22%) of Manchester landlords and nearly four out of 10 (37%) landlords in the capital all want to call it a day due to the overall situation for landlords worsening.
Cornerstone Tax’s findings come after research from Dataloft found that thousands more families are now renting smaller homes than they were three years ago.
In the first half of 2020, nearly 57% of new tenancies signed by families on £30,000 to £70,000 a year were for homes with at least three bedrooms. In the same period of 2023, that figure had fallen to less than 51%.
David Hannah, Group Chairman of Cornerstone Tax, reckons record mortgage rates combined with the highest tax burden since the second world war have pushed many buy-to-let landlords out of the market, reinforcing a supply crisis that continues to squeeze budgets of tenants.
He says: “Many of these landlords took out mortgages on buy-to-let schemes during a period of sustained low interest rates; fast forward to 2023 and the pressure currently facing landlords is simply too much.”
SPIRALLING INTEREST RATES
“Spiralling interest rates and the highest tax burden since the second world war have forced thousands of landlords to sell up, which then puts further pressure on renters due to a lack of stock.
We are seeing an exodus of landlords from the capital and South East.”
“We are generally seeing an exodus of landlords from the capital and South East, looking towards the North East of England instead.
“It’s a region that’s seen the highest growth in property prices in the last twelve months, with many seeing it as a much safer investment than the capital.”
BONA FIDE PRIVATE RENTAL SECTOR
And he adds: “The current strain could have been eased in last month’s Autumn Statement by way of removing the second home surcharge from bona fide private rental sector investors and giving them a reduction in their acquisition costs as well as reinstating full relief for mortgage interest payments in common with other businesses that have to borrow money to provide their services.
“This double measure would have both reduced the costs of purchase, whilst allowing landlords to freeze, or even potentially cut, rents which have had to have both these penal measures “costed in” over the last few years.
“It would also stimulate purchases in the market at a time when owner occupiers are unable to purchase because of affordability issues.”
